The online brokers Swissquote, Phillip Capital, Tier1FX, and OANDA, and technology developer TradAir, have provided updates regarding Brexit -related market volatility, as markets reacted more than expected this Friday despite advanced preparation for price turbulence.
In recent weeks leading up to the UK referendum vote, Finance Magnates reported extensively on several dozen online FX and CFD brokerages that took measures to reduce client’s risk ahead of the event by cutting leverage in related financial trading products.
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Post-Brexit vote effects
Now that the vote is over, even though markets had expected volatility around the event – they also expected the vote to go towards the remain side and were shocked after the leave campaign won by a small margin – prompting the historic price volatility across many assets today.
Moments ago US capital markets closed broadly lower with banks taking a hard hit, including Morgan Stanley down 10% at one point, as trading week had a wild Friday, something which could persist into next weeks trading.
Swissquote mitigated Brexit market risks
One of Switzerland's leading FX and multi-asset brokers, SwissQuote, provided a statement to Finance Magnates in response to questions concerning Brexit-volatilty. The company confirmed how it handled the market turbulence, a SwissQuote spokesperson shared:
"During the most volatile foreign exchange trading day since the SNB abandoned the EURCHF floor on January 15, 2015, Swissquote successfully mitigated the market and credit risks as a result of the combined risk management measures we taken prior to UK's EU referendum planned on June 23rd and our advanced trade execution algorithms seamlessly matching client orders with continual access to available Liquidity ."
PhillipCapital UK says no adverse impact
Sean Tan
Source: LinkedIn
PhillipCapital UK’s Head of Derivatives Trading, Sean Tan, shared with FinanceMagnates through a company spokesperson: “Due to the risk measures we took in the run up to the election there has been no adverse impact on our operations or risk exposure.”
”PhillipCapital UK is part of the PhillipCapital group of companies and our clients are our number one priority. The group has previous experience navigating major economic events with success and this one is no exception. We will assist our clients wherever we can and urge them to exercise strong risk management in their trading activities during these volatile times," he added.
"We will continue to monitor events over the weekend as well as markets in the week ahead in order to consider when it might be appropriate to adjust margins back towards previous levels. Our margins reflect the level of risk we perceive is prevalent in the markets at that time and help to ensure client positions are able to withstand the volatility in the markets."
TradAir Brexit views on platform
With offices in Singapore, Tel Aviv, New York, and London, technology provider TradAir, which caters to FX firms, explained in a corporate statement that its platform performed well during Brexit.
Paul Blank, VP Marketing at TradAir said: “We put into action pre-prepared plans to ensure platform stability and performance, which were based on various scenarios of increased market volatility, including levels seen around the SNB move.”
Paul Blank
Source: LinkedIn
“In addition, extra support and operations staff were on hand to pro-actively monitor every aspect of the platform, including client and liquidity provider connections, to ensure platform performance and stability.”
Mr. Blank further explained: “Importantly, clients were briefed, to ensure they were familiar with the platform risk settings, and had appropriate risk and volatility settings and last-look levels implemented, to protect themselves, whilst ensuring they can provide executable liquidity to clients."
OANDA's VP on Brexit
Earlier in the New York trading session today, a company spokesperson provided Finance Magnates with comments from Dean Popplewell, Vice President of Currency Analysis at OANDA, regarding today’s volumes:
“After last night’s historic moves across all the asset classes, the market is taking a breather - currently, the lack of liquidity experienced during the count is a non-issue, there is depth in the market aside from wider spreads in GBP.”
Mr. Popplewell added: “Investors and dealers will want to see what happens with equities and what or if the central banks are indeed called upon to calm investors’ fears. Currently, markets are proceeding in an orderly fashion as North America digests this seismic decision.
Dean Popplewell
Source: LinkedIn
With regard to Brexit fallout, Mr. Popplewell said: “Investors have today woken up to a new global crisis which will surely prevent the US Fed from raising interest rates as planned this year, and might even provoke a new round of emergency policy easing from Tier I and II central banks (Fed fund futures are now pricing in a rate cut).
Dealers, investors and speculators will increasingly focus on the weakest links in the E.U – Portugal, Italy, Greece, and Spain. These nations are expected to come under immense pressure, as they are the chosen ones to suffer the most from a hypothetical breakup.”
OANDA experienced no issues
Shortly after publication of this article, Finance Magnates received additional comments from OANDA, in response to questions: “Despite extreme market volatility, OANDA operated effectively and experienced no issues. Our team was well prepared for this event, offering client support and providing commentary through the night. All trades were honored and there were no re-quotes or rejections.
We managed our risk exposure very effectively and remain in a strong regulatory capital position. As we shared with the NFA and FCA today, our risk management protocols were prepared well in advance to address any potential impact to liquidity, margin requirements or trade interruptions. We will continue to monitor margin requirements into next week and don't anticipate any issues.
The ability to perform at such a high level through an event like this is a testament to not only our team's preparedness, but also the advanced state of our execution technology. The speed of our technology allowed our clients to enter and exit the market extremely efficiently through this event. Similar to last year's SNB event and other major market moving events, it is absolutely critical to be armed with the best and fastest execution technology possible. That was proven once again today."
Tier1FX Brexit Update
Malta-based online brokerage Tier1FX provided a Brexit-related update following the wild market volatility this Friday. The company said it was business as usual and provided the following statement:
"Tier1FX confirms that our strict risk controls, advanced technology and preventive measures, taken well in advance, ensured that both clients’ and company’s assets are well protected and prepared to successfully meet any market challenges resulting from this event of undoubted historical significance."
In addition, the company said that it put into effect further measures to keep margin at the 4% level in line with the lowered leverage of 25:1 that it had cut as volatility was anticipated due to the Brexit vote.
